How An Online Gambling Ban Could Kill Land-Based Casinos

A lawyer recently argued that a bill intended to ban online gambling would not only shut down online gambling in the United States but also unintentionally handicap the land-based casino industry, as it is currently written.

Russ Marsden’s 12-page paper “Restore America’s Wire Act: Cloud Killer?” was published in the June 2017 edition of Gaming Law Review and is available to read here.

According to Marsden, the passage of the Restoration of America’s Wire Act would trigger a series of unintended consequences that could set the gaming industry back decades.

Similarities with another Wire Act paper

Marsden makes note of the ambiguous language in sections of the Wire Act. But he seems to fall into the camp that the Wire Act should be interpreted as a sports betting law.

However, Marsden’s paper differs from a previous takedown of Wire Act revisionism published by Competitive Enterprise Institute Fellow Michelle Minton in 2014.

Minton dissected flaws in the original interpretation of the 1961 Wire Act. Marsden focuses on how RAWA could alter the gaming landscape if becomes the law of the land.

Marsden’s concerns

First, Marsden notes that current opposition to RAWA tends to fall into two camps:

States’ rights advocates

Online lotteries (and I would add online gaming advocates)

But Marsden later warns of a third reason to oppose the legislation.

“RAWA may have damaging technical consequences for legal land-based casinos,” he notes. “That RAWA’s retrograde technical consequences may be unintentional appears to be supported by the fact that the bill’s primary advocates come from non-technical backgrounds.”

Marsden goes on to explain the myriad of ways land-based casinos use the internet. Internet communications can often cross state borders by happenstance.

“No one can ever guarantee that a packet from a communication stream starting and ending in the same state will not cross a state boundary,” Marsden says. “At some point, some packet(s) will.”

Marsden also explains how increasingly popular cloud storage systems are often spread across several locations and how “Using Cloud services, including Cloud storage, would result in the client’s data being packetized and crossing state boundaries.”

Where this becomes a problem

As Marsden points out, RAWA plainly says:

“The term uses a wire communication facility for the transmission in interstate or foreign commerce of any bet or wager includes any transmission over the Internet carried interstate or in foreign commerce, incidentally or otherwise;”

In Marsden’s opinion, “It is clear that RAWA would apply to any and all communications that use any portion of the Internet.”

He goes on to say, “Put differently, the wording of RAWA means that any use of any portion of the Internet, no matter how apparently small in geographic terms such as between intrastate locations, would be covered.”

Another troublesome point in Marsden’s eyes is the use of the general terms “bet or wager.”

Instead of singling out specific wagers, RAWA precludes any bet or wager. That even applies if it originates from a land-based casino that might happen to cross over state borders. This is something Marsden explains could happen for a variety of reasons.

Marsden’s conclusions

Marsden summarizes his report thusly:

“RAWA would force all legal land-based casinos, including tribal casinos and traditional commercial casinos, into a technological backwater that would be functionally equivalent to networking technology as it existed approximately 20–25 years ago.

Put differently, RAWA would force legal land-based casinos back into the pre-Internet era and would freeze them in an obsolescent technological time warp. Land-based casinos would be unable to adapt to new and evolving technologies. Eventually, this technical stagnation would lead to financial stagnation.

“RAWA would also kill emerging opportunities. For example, RAWA would prohibit the ability to monetize multiplayer online games, such as where game tournaments enable top players to play against each other while spectators make bets on the outcomes (esports).

Think of all the other opportunities that are not yet known and that may originate from other online sources of entertainment. RAWA eliminates all these potentialities. For all of the reasons discussed in this article, passing RAWA would be very damaging to the land-based casino industry.”

Steve Ruddock -
Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.